house prices reflected via image of english housing

House prices rise as market begins to stabilise

New data from Halifax has revealed UK house prices climbed by 1.1% over February as the market began to stabilise following a period of successive drops in price growth.

The average price of a property sat at £285,476 during the second month of 2023, up from £282,360 in January. The annual percentage change in prices also remained at +2.1% for the third successive month.

This comes after prices fell five times in the six months leading up to the end of last year before a stabilisation in January saw prices rise by 0.2%.

However, the 1.1% rise seen in February and steady annual change suggests the market may be beginning to stabilise as falling mortgage rates across January brought increase consumer confidence – a sentiment reflected by Kim Kinnaird, Director, Halifax Mortgages:

“Recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labour market are arguably helping to stabilise prices following the falls seen in November and December.”

Kinnaird did, however, concede that the general trend remains a downward one with the cost of a home still down on a quarterly basis. Charlotte Nixon, mortgage expert at Quilter, echoed this feeling, suggesting that the increase in consumer confidence is “potentially short-lived”:

“While this morning’s figures are slightly more positive than some may have expected, the high cost of energy and increased mortgage rates could see a return to falling prices over the next few months. Many homeowners are struggling to keep up with the increasing energy bills, which is causing them to cut back on their spending elsewhere. This, in turn, has decreased demand from buyers as people are hesitant to make such a significant investment in a time of financial uncertainty.

Similarly, high-interest rates have made it more challenging for potential buyers to secure a mortgage, which is further impacting the demand for homes.”

“It’s far too early to be calling a soft landing,” added Sarah Coles, head of personal finance, Hargreaves Lansdown:

“There are still an awful lot of challenges facing the market, which mean it’s likely to decline from here, and we can’t rule out something more substantial…

…When you drill further into the figures, it’s clear certain parts of the market are pushing the average up, and some are looking pretty miserable. Looking at flats alone, prices are down over the year. Meanwhile, when you remove new builds from the equation, overall prices are up around 1% – the smallest rise in almost a decade. Falling or stagnant prices could persuade buyers that a wait-and-see strategy is still worth pursuing.”

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